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By Mania Saini and Hadeel Al Sayegh

DUBAI, May 12 (Reuters) - Saudi oil giant Aramco expects oil demand to remain strong this year and also forecasts further increases if the U.S.-China trade dispute is successfully resolved.

Washington and Beijing agreed on Monday to temporarily reduce mutual tariffs, a deal that exceeded expectations as the world's two largest economies seek to end a trade war that has fueled recession fears and roiled financial markets.

"We expect demand to remain steady and growing compared to 2024, and if the tariff issue is resolved completely... that will also add to the additional demand that the market will see ," Amin Nasser, the company's president and chief executive, said in a conference call after the earnings announcement on Monday.

Aramco, the world's largest oil exporter, announced a 4.6 percent drop in first-quarter profits on Sunday, due to lower sales and higher operating costs amid the economic uncertainty affecting oil markets.

Saudi Arabia has invested heavily in the past few years to diversify its economy away from oil, as part of its Vision 2030 strategy.

But with oil prices falling and costs rising, sources told Reuters in November that some of the kingdom's most ambitious projects, including a planned futuristic city in the desert, were being scaled back to focus on completing the infrastructure needed for global sporting events.

A Reuters poll of 40 economists and analysts in late April forecast Brent crude prices to average $68.98 a barrel in 2025, down from the March estimate of $72.94.

Sources told Reuters earlier this month that the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and partners, would accelerate the increase in oil production, which could return up to 2.2 million barrels per day to the market by November.

The group surprised markets in April by agreeing to a larger-than-expected production increase for May, despite weak prices and slowing demand.

Aramco announced that this additional production will add $1.9 billion to annual operating cash flows.

Despite the impact of tariffs and market uncertainty, the company has seen strong growth so far in the second quarter of 2025, executives confirmed.

"It is too early to assess the full impact of the trade negotiations, given the many factors at play," Nasser said, adding that Aramco is well-positioned thanks to its strong financial position and flexible capital.

(Prepared by Hassan Ammar and Sherine Abdel Aziz for the Arabic edition - Edited by Ali Khafagi)